I just got my annual 1099-Div statement from Frontier Communications. The stock (192 Shares) itself was received during the year from the Verizon spin-off activities. The interest portion ($21.18) of the 1099 is fine, but in Box 3, "Non-dividend Distributions", it shows $50.82. The back side of the form says I must reduce my cost basis by this amount. I don't mind doing that too much, but I am trying to figure out where that number came from. It doesn't match up anything I have in my records on the spin-off activities. Does anyone have any ideas on the basis for the $50.82 ?
Mystery entry on Frontier Communications annual statement
Jan 05, 2011
2 Replies
called "Return of Invested Capital." It sort of means the company had so much cash lying around that i) it did not need at the moment, and ii) resulted from non-operating income. Perhaps it sold a building.
So it returned this money to its owners. In effect the owners cost basis is reduced by the return of investment/invested capital. in your own carefully maintained personal records, reduce your basis by the amount you had returned to you.
If it should happen, and this would be rare, that the basis is reduced to zero, any additional return of invested capital (or as they called it, nondividend distribution) is short or long term capital gain, shown by you on schedule D.
Art:
I do not have any record of having received the "return of capital investment", but will dig thru my bank deposit slips and see if I can find anything.
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